What's next for the space?
The wholesale space has been steadily gaining mortgage market share in recent years – and that’s a trend that’s only set to continue, according to United Wholesale Mortgage’s (UWM’s) Alex Elezaj (pictured).
The lending giant’s executive vice president and chief strategy officer told Mortgage Professional America that with the wholesale channel reportedly at a 15-year high in its overall share of the mortgage market, UWM’s firm focus was on continuing to fuel the space’s further growth.
The sector’s recent success, he said, comes as little surprise. “It’s exciting because what we’ve been telling people all along is what’s happening,” he said. “We’ve been saying this for years: ‘The wholesale [channel] is going to continue to grow. It’s the best place for consumers to get a loan,’ and we’ve continued to gain market share.
“Now what we’re really focused on is: how do we get the overall wholesale market share to over 50%? Right now, that’s our long-term strategic goal, and that’s our focus.”
Turbulence and uncertainty throughout the US mortgage market have continued into 2024, with high interest rates and affordability hurdles weighing down on homebuyer sentiment throughout the year to date.
UWM’s earnings took a hit from that ongoing volatility, slipping by 57.7% quarter over quarter in Q2 thanks to a decline in mortgage servicing rights (MSR) value, although Elezaj said the company is bullish about the future of the market with a recent slide in rates expected to continue.
An uptick in overall activity is set to follow, according to Elezaj. “We’re excited about the market in general,” he said. “When rates were even on the higher end, we were doing well. And obviously as they go lower, we’ll do even better in terms of originations and just the overall business.”
How will interest rate cuts impact the mortgage market?
The Federal Reserve appears poised for an interest rate cut in September, with markets already pricing in that probability – and mortgage rates dipping noticeably as a result.
A further 25 to 50 basis points’ worth of cuts, Elezaj said, could see activity spike again, although the executive is taking nothing for granted on the current market outlook. “We’re being cautiously optimistic,” he said. “Obviously, things can change.
Paul Carson, a mortgage broker at Philadelphia Mortgage Brokers, suggests that a drop in mortgage rates to around 5.5% to 6% could encourage more homeowners to enter the market.
— Mortgage Professional America Magazine (@MPAMagazineUS) August 15, 2024
Read more: https://t.co/5aUjTEnrcM#economicoutlook
“The rates rallied, then they came back, and then they went down again. So things bounce around – but that’s why we’re pretty straightforward with things.”
A shift of retail loan officers away from that space and towards careers as independent brokers will remain a strong industry trend looking ahead, he said, particularly because of the ability to work with lenders who prioritize streamlining business and generating efficiencies through technology.
It’s a fact that’s been borne out in the company’s own numbers, according to Elezaj. “We’re seeing it every day, every week, every month,” he said. “We continue to have 600, 700 people a week – brokers, real estate agents, loan officers – that come out to UWM every single week.
“So you’re talking about thousands of people a month looking at growing their business, learning our products. These are even new people that are looking to get trained and developed. So the energy around the wholesale channel just continues to be at a very high level.”
NAR changes come into play
A topic that’s loomed over the real estate sector as a whole in 2024 has been the National Association of Realtors (NAR) settlement, with sweeping changes set to impact the way realtors do business as of last Saturday (August 17).
It’s a development the mortgage industry will be watching with keen interest – but one that poses little threat to the sector, according to Elezaj. “With any business, whether it’s in the mortgage space or real estate, I think anytime things change you have to understand what it is and figure out how to take advantage of the changes.
“From our perspective [there’s] not much change, other than there’s more upfront agreements and disclosures that have to be made between the seller of the home and the real estate agent. But people have still got to show their value and execute on what they need to do. So from our perspective, we think it’ll actually strengthen a lot of the business, and our partners will be even stronger partners to us.”
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